The Rise and Fall (and Possible Rise Again) of Pronto

The bike share nonprofit went bankrupt in bike-friendly Seattle. Is it worth saving?

When your job at the Seattle Department of Transportation is to champion the city’s bike share program, you know you’re in trouble when, of all people, city council member Mike O’Brien—former Sierra Club leader, kayaktivist who rides his bike to city hall every day—starts using words like “frustrated” and “uncomfortable” and then stops your cheery PowerPoint presentation in its tracks to say it’s time for “the interactive part of the discussion.”

O’Brien, typically a smiley guy who looks something like John Denver, had a lot of questions for Seattle Department of Transportation’s chief of active transportation, Nicole Freedman, when she made her urgent sales pitch to his committee in February.

A kinetic, athletic woman and former member of the 2000 U.S. Olympics cycling team, Freedman ran Boston’s successful bike share program, Hubway, before joining SDOT in 2015. Now, just 16 months after debuting in October 2014, Pronto—Seattle’s 500-bike operation—would go under unless the city rescued it. To save the beleaguered program, she wanted O’Brien’s committee to free up $1.4 million in city money.

How did a bike share program, in supposedly bike-friendly Seattle get to the point that it couldn’t pay its bills?

After all, an impressive 3.6 percent of Seattleites bike to work—the sixth highest rate in the country. And Pronto had an enthusiastic local corporate sponsor, Alaska Airlines. In other similarly sized cities, such as Boston and DC, bike share is a success: ridership is around three to five rides per bike, per day and the number of stations has expanded by 80 and 290 respectively.

Seattle’s Pronto bikes, meanwhile, get less than one ride a day. And don’t blame Seattle’s hills; every city has its unique challenges. Boston is freezing cold and DC is a muggy swamp. And the city’s fabled lack of a biking infrastructure doesn’t let Pronto off the hook either. Seattle spent nearly $10 million on designated lanes, traffic lights, and other infrastructure in 2015 and is poised to spend $19.2 million in 2016.

So what went wrong?

Here’s what SDOT will tell you: Pronto bombed because it failed to get sponsors—and it failed to get sponsors because “overoptimistic” ridership estimates led to disappointing numbers and, in turn, a dearth of backers.

But Holly Houser, the former head of Pronto, was surprised by a narrative that threw the nonprofit “under the bus.” She credits her scrappy crew with coming together and “pulling off a miracle,” with the only bike share system to launch in 2014 after the national industry’s leading equipment vendor went bankrupt. Despite the odds, her board landed big sponsorships: $500,000 from Seattle Children’s hospital; a pledge of $450,000 from Group Health; $2.5 million over five years from Alaska Airlines.

Then, in May 2015, SDOT approached Pronto with a plan to take over the program. “We thought, ‘This is great,’ ” Houser recalls. “SDOT said, ‘Don’t do anything, we got this,’ and we started winding down.”

People started leaving the board and Houser left Pronto herself in September, thinking the city would take the reins. In concrete terms, that meant Pronto didn’t pursue new sponsorships.

But “the acquisition didn’t happen when we were told it would,” says Houser. The City of Seattle kept delaying the promised takeover. And without new sponsorship money, the program started running out of cash, which it desperately needed to pay back an original capital startup loan from KeyBank.

Why did the city and SDOT take their sweet time? An expected $10 million federal grant had yet to come through, says SDOT deputy director Barbara Gray. When the grant still hadn’t materialized in the fall of 2015, SDOT cued up an impromptu plan B, asking the council for $5 million to cover a Pronto expansion, but didn’t alert council to Pronto’s sad balance sheet. It didn’t come to light until much later, for example, that SDOT had already written two checks to Pronto totaling $305,000 in late 2015 and early 2016 to cover Pronto’s vendor contract—without the council’s knowledge.

“It would have been good to be having this discussion three months ago,” O’Brien said of SDOT’s lack of transparency at the committee hearing in February, when the council was suddenly put in the position of having to green-light a $1.4 million buyout—or kiss bike share goodbye. “It doesn’t sit well with me.”

To be fair, without the debt from the startup costs, Pronto’s been making enough to nearly break even. In addition to the original sponsorships, another $610,000 a year comes from tourist passes and annual memberships, which allow people to take a bike from any dock for a half hour at a time (or longer with additional service fees).

But there was another problem. Those revenues didn’t leave any extra money to expand beyond Pronto’s 54 bike stations. See, conventional wisdom holds that just like any network, reaching a critical mass through expansion is the only way to make the system successful. Seattle Bike Blog’s Tom Fucoloro explains the exponential “network effect” this way: “When you build just one new station, every other station in the system becomes more valuable.”

Pronto’s initial network itself was flawed too, Fucoloro adds. Rather than building sequentially outward from downtown, Pronto spent money building an isolated satellite ecosystem with a cluster of 12 bike docks in the University District that doesn’t enhance the network as a whole.

“We don’t have a 54-station system,” he says, “we have a 42-station system in the center city and that’s not enough. We gave it a halfhearted try and got halfhearted results.”

Nicole Freedman, the SDOT lieutenant who pled her case to O’Brien, agrees: Doubling in size would result in a three- to fivefold increase; going from 50 stations to 100 stations, she says, would increase ridership from the 140,000 trips taken in the 16 months Pronto has been operating, to between 500,000 and 800,000 trips a year.

The network effect was key to the ridership increases in Boston and Washington, DC. And, as Freedman pointed out—with red and blue circles in her PowerPoint presentation—those systems are publicly owned.

In short, just like any transportation system, bike sharing needs subsidies. On this, Freedman and O’Brien agree. Fending off Fremont businesswoman Suzie Burke during a Seattle Channel debate over the flailing system (Burke argued that bike sharing should be left to a private, for-profit company while the city spends money on more important things, like cops), Freedman noted that most transportation systems are subsidized. She cited buses. O’Brien nodded, and added, “We subsidize driving.” In other words, The public foots the bill for car travel. Why not bikes?

Holly Houser is still smarting from the way the program she built from scratch has been maligned as a failure. “It’s upsetting to me that the city council is now asking, ‘How did we get here?’ ” she says, because Pronto was under the impression that city council, “not just SDOT,” was in on the acquisition.

Despite the rocky history, though, she wants the council to approve the Pronto takeover. “The city needs to do what other cities do by making a financial commitment to bike sharing.”

But with little more to go on than SDOT’s pitch to spend $1.4 million on Pronto’s infrastructure—and then bid it out in the hope that a contractor can make it work—O’Brien remained nervous that there wasn’t time to make a “more informed” decision at his emergency February committee briefing. His committee delayed the vote twice before sending it to a skeptical council in mid-March.

“It’s critically important that the second attempt is sustainable,” O’Brien told Freedman at the briefing, “otherwise we poison the well for bike share in Seattle for a long time.”